The Role and Perceptions of Independent Audit Partners in the Governmental Audit Market

Audits are the primary means of monitoring that public funds are appropriately spent by governmental entities. Currently, independent auditors (rather than governmental auditors) are the primary suppliers of governmental audit services, despite the fact that many of them view governmental audits as “secondary” (AICPA 1987). Furthermore, nongovernmental auditors are believed to be less “independent” and more prone to lose sight of the programmatic demand to safeguard the public trust (Power 1997) than governmental auditors. To better understand the supply of governmental audit services, this study investigates independent audit firm partner opinions of governmental audits and their motivation to pursue these engagements. Multiple regression results of our data reveal that partners are more likely to pursue governmental audits if they believe that desirable intrinsic and extrinsic rewards are attainable through performing these audits. Furthermore, environmental risk factors—an active political climate and authoritative changes—reduce partner motivation to pursue governmental audits. It is suggested that environmental risk factors disrupt the comfortable principal/agent relationship of the auditor and auditee because the relationships have become decoupled (abstracted) from the audit's programmatic mission.